How Chase Sapphire retained customers(hbswk.hbs.edu)
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How Chase Sapphire retained customers
https://hbswk.hbs.edu/item/how-chase-sapphire-made-credit-cool-for-millennials
10 comments
For those of you with 100k in stocks sitting around, I'd recommend the BofA Premium rewards card. You need to transfer 100k in stocks to BofA's brokerage but that'll give you a card which gives 3.5% back on dining/travel and 2.65% on everything else. It saves you way more time than juggling points, and I'm much happier after switching to a one card system.
I really haven't seen any card that has better net reward generation than Discover, if you want a "one card for maximum rewards". You can definitely earn more if you juggle cards, but the base discover card is really quite good as a one-card system, and I think would beat any "2%-3% on everything" card.
It does operate on 5% categories each quarter, but those categories tend to be really common and broad, and their systems aren't exactly the best at determining when something shouldn't be in a category. In 2021, their categories are (Grocery Stores, Walgreens, CVS), (Gas Stations, Wholesale Clubs, Streaming Services), (Restaurants, Paypal), and (Amazon.com, Walmart.com, Target.com). That's in addition to 1% on everything else.
Combine that with no annual fee (the BofA Premium Rewards card is $95/year, Sapphire Reserve is $550/year)... its very difficult to beat.
That being said, I'm a bigger fan of the Chase Freedom Unlimited or Flex, as I have everything else with Chase and I prefer keeping total "accounts to log in to" at a minium. The Flex has a rewards system similar to Discover, whereas the Unlimited is more static x% on Dining; they both get pretty close to Discover.
It does operate on 5% categories each quarter, but those categories tend to be really common and broad, and their systems aren't exactly the best at determining when something shouldn't be in a category. In 2021, their categories are (Grocery Stores, Walgreens, CVS), (Gas Stations, Wholesale Clubs, Streaming Services), (Restaurants, Paypal), and (Amazon.com, Walmart.com, Target.com). That's in addition to 1% on everything else.
Combine that with no annual fee (the BofA Premium Rewards card is $95/year, Sapphire Reserve is $550/year)... its very difficult to beat.
That being said, I'm a bigger fan of the Chase Freedom Unlimited or Flex, as I have everything else with Chase and I prefer keeping total "accounts to log in to" at a minium. The Flex has a rewards system similar to Discover, whereas the Unlimited is more static x% on Dining; they both get pretty close to Discover.
5% rotating category cards aren't that great IMO, it's a waste of your time tracking what the categories are. And if you add up the overall cashback percentage you're getting, it's likely going to be less than 2.65% unless you're spending more than 40% of your spending in those categories.
If you do a lot of Amazon, you might still want to have their 5% card as the default in your Amazon account, for about double the rewards.
The Amazon card rewards redemption is pretty much automatic, so I think the only additional hassle of this particular second card is that there's an additional monhtly bill to make sure gets paid on time.
The Amazon card rewards redemption is pretty much automatic, so I think the only additional hassle of this particular second card is that there's an additional monhtly bill to make sure gets paid on time.
Or you just have paid automatically. Some people may not like that but IMO the Amazon card makes a lot of sense to use for Amazon properties (and nothing else).
Chase will give you $2k (in cash) if you open a premium account and deposit $250k in it.
That does not make sense. Presumably your stocks will still grow/give dividends wherever they are. Cash would be locked to the low return rate of Chase account though.
Just did this. Now waiting 4 months to withdraw and close.
4 months for a 0.8% return isn't very good. Better than CDs but your expected return in the market is higher.
Yep. This was money I had in a Vio Bank savings account where the rates have gone from "very small" to "almost nothing".
If the cash shouldn’t be in the market, say an emergency fund, the return is worth the effort.
You don't need to transfer cash, it can be stocks from your current brokerage.
Is it a cash account or a brokerage? I figured it was an additional .8% to whatever you're already making
From https://account.chase.com/consumer/banking/chaseprivateclien...:
"Within 45 calendar days, transfer a total of $250,000 or more in new money or securities to a combination of eligible checking, savings and/or investment accounts (excludes Chase business checking and savings accounts, any You InvestSM, J.P. Morgan retirement accounts and CDs), and maintain the balance for at least 90 days."
But note, another requirement is: "Meet with a Private Client Banker by January 15, 2021 to upgrade your account to Chase Private Client."
"Within 45 calendar days, transfer a total of $250,000 or more in new money or securities to a combination of eligible checking, savings and/or investment accounts (excludes Chase business checking and savings accounts, any You InvestSM, J.P. Morgan retirement accounts and CDs), and maintain the balance for at least 90 days."
But note, another requirement is: "Meet with a Private Client Banker by January 15, 2021 to upgrade your account to Chase Private Client."
One potential combo for those without 100k of stocks, or without willingness to move them:
Alliant Visa Signature (3% cash back first year, no fee. $99 fee per year and 2.5% afterwards) for all purchases. Edit: It looks like now they have removed that 1st year 3% rate
Amazon's card is 5% back on Amazon purchases
Apple's card is 3% back for Apple purchases
I still find that American Express have some of the best perks/service as far as disputing charges & insurance (rental car insurance for example is better than Visa - or was last year)
Alliant Visa Signature (3% cash back first year, no fee. $99 fee per year and 2.5% afterwards) for all purchases. Edit: It looks like now they have removed that 1st year 3% rate
Amazon's card is 5% back on Amazon purchases
Apple's card is 3% back for Apple purchases
I still find that American Express have some of the best perks/service as far as disputing charges & insurance (rental car insurance for example is better than Visa - or was last year)
+1 - The BofA Premium Rewards card + Cash Rewards card is all you need. The Cash Reward card allows you to select a 3% cashback category (5.25% back with Platinum tier). I have it set to Gas (choose your biggest expense). The rest goes on Premium rewards card with 2.65% back on everything.
For reference, the categories available are gas, online shopping, dining, travel, drug stores, and home improvement and furnishing.
You can change you category once per calendar month. E.g., mine is normally online shopping, but when I needed a leak repaired on my work, I waited until near the end month, flipped the category to home improvement, paid the roofing bill, and then on the first of the next month flipped it back to online hopping.
Without the tiered rewards, it is 3% cash back for the selected category, 2% grocery stores and wholesale clubs, 1% everything else.
The tiers are at $20k, $50k, and $100k in BofA or Merrill checking/savings/investment accounts (3 month average combined balance). First tier gets you 1.25x the base rewards. Second tier is 1.5x. Third tier is 1.75x.
You can change you category once per calendar month. E.g., mine is normally online shopping, but when I needed a leak repaired on my work, I waited until near the end month, flipped the category to home improvement, paid the roofing bill, and then on the first of the next month flipped it back to online hopping.
Without the tiered rewards, it is 3% cash back for the selected category, 2% grocery stores and wholesale clubs, 1% everything else.
The tiers are at $20k, $50k, and $100k in BofA or Merrill checking/savings/investment accounts (3 month average combined balance). First tier gets you 1.25x the base rewards. Second tier is 1.5x. Third tier is 1.75x.
A discover will give you 5% on Amazon, Gas, Dining and Groceries depending on the Quarter, doubled at the end of the year but maxes out at $75 per quarter. Essentialy 10% cashback when you can get it.
One benefit I've taken more advantage of, that I've found a lot of people aren't familiar with is the concierge service. You can call or email them (which is now my preference).
In addition to some obvious things like finding a hotel or calling a car rental agency on my behalf (being able to send a quick email is significantly more convenient than waiting on hold for an hour) they've...
1. Helped me find an air conditioner along my driving route in CA when they were mostly all sold out. This took place over 48 hours. They would give me updates every 6 hours either via email, phone, or both.
2. Called several bike repair shops with information that was important to me — turnaround time, walking distance, price, etc...
3. Researched comparative information on model years of a car I was thinking about buying. E.g. 2017 adds these features, 2018 has these changes from 2017, etc...
4. I've called them to see if there are any road closures or issues with my route while driving.
As mentioned below, the card is really $250 a year or roughly $20/month and is it worth it for this benefit alone. I've used Magic ($35/hr...) and Fancy Hands and I've actually found the service to be superior. And I don't have to worry about the amount of time they spend.
From what I can tell they have what seems to be employed professionals who answer the phone (and maybe the initial emails) who are very personable and knowledgeable and then farm out a lot of the actual grunt work to different researchers. While the quality I've gotten from Fancy Hands / Magic has been much lower in terms of actually understanding what I'm asking for. Seems to be more college students / gig workers.
That's separate from the very good car rental insurance... DashPass (no delivery fees, reduced fees), 10X Lyft points. And things like extended purchase and warranty protection which I haven't used yet.
In addition to some obvious things like finding a hotel or calling a car rental agency on my behalf (being able to send a quick email is significantly more convenient than waiting on hold for an hour) they've...
1. Helped me find an air conditioner along my driving route in CA when they were mostly all sold out. This took place over 48 hours. They would give me updates every 6 hours either via email, phone, or both.
2. Called several bike repair shops with information that was important to me — turnaround time, walking distance, price, etc...
3. Researched comparative information on model years of a car I was thinking about buying. E.g. 2017 adds these features, 2018 has these changes from 2017, etc...
4. I've called them to see if there are any road closures or issues with my route while driving.
As mentioned below, the card is really $250 a year or roughly $20/month and is it worth it for this benefit alone. I've used Magic ($35/hr...) and Fancy Hands and I've actually found the service to be superior. And I don't have to worry about the amount of time they spend.
From what I can tell they have what seems to be employed professionals who answer the phone (and maybe the initial emails) who are very personable and knowledgeable and then farm out a lot of the actual grunt work to different researchers. While the quality I've gotten from Fancy Hands / Magic has been much lower in terms of actually understanding what I'm asking for. Seems to be more college students / gig workers.
That's separate from the very good car rental insurance... DashPass (no delivery fees, reduced fees), 10X Lyft points. And things like extended purchase and warranty protection which I haven't used yet.
For each Sapphire Reserve card, Chase gets a $550 annual fee + 3.0% of every swipe.
Each cardholder gets $300 in travel credit + $120 in DoorDash credits and from 1% to 4.5% of every dollar spent refunded depending on how you spend your points. Plus purchase protection, Lyft Pink and a bunch of other travel benefits.
For the cardholder, it's easily break even if you spend ~$10k+/year on your credit card. For Chase, they only lose when users spend less than $10k and leave after the first year.
Each cardholder gets $300 in travel credit + $120 in DoorDash credits and from 1% to 4.5% of every dollar spent refunded depending on how you spend your points. Plus purchase protection, Lyft Pink and a bunch of other travel benefits.
For the cardholder, it's easily break even if you spend ~$10k+/year on your credit card. For Chase, they only lose when users spend less than $10k and leave after the first year.
https://www.reddit.com/r/churning/
Here’s the best source for information on which credit cards have the best incentives. Please note that anyone who does not plan to pay off their full balance at the end of each month should not be in the business of credit cards.
Here’s the best source for information on which credit cards have the best incentives. Please note that anyone who does not plan to pay off their full balance at the end of each month should not be in the business of credit cards.
I was living in Manhattan when the fancy Chase Sapphire came out. It was genuinely shocking to me how many people I knew switched to Chase just to get the new card design. To be fair, it did look and feel exponentially better than any other cards around at the time.
Remember the Amex Platinum scene in American Psycho?
I chose amex cash magnet out of a sea of otherwise equivalent 1.5% cashback cards for pretty much the same reason. kinda makes me wonder why most credit cards have such boring and even ugly designs. a conservative design can still be appealing, and it's not like graphic designers are prohibitively expensive to employ.
I'm too practical, to me a fancy expensive looking card is just a fraud magnet.
Chase cards are fraud magnets. The bin is well-known, and Chase is short on card numbers, so people have actually brute-forced credit card numbers. Then they validate them by signing up for free trials of services using credit cards.
Chase is also the only major bank that still prints the entire 16 digit account number on every statement. Anyone without e-statements is a ripe target for mailbox thieves who now have the full name, address and card number.
Brute forcing died a long time ago. There aren't any services left that don't require a CVV.
that's not a valid concern as far as real life ux goes. the card issuer deals with any fraud.
these cards aren't uncommon, at least in high cost of living places because which are all dense cities.
these cards aren't uncommon, at least in high cost of living places because which are all dense cities.
They retain me with the 1.5x value if points are used for booking flights through their portal.
I'm too lazy to run the numbers, but I think I'd lose value on the points I have/will have next year if I downgraded, especially since you can move all your points over from other Chase cards to that account.
I'm too lazy to run the numbers, but I think I'd lose value on the points I have/will have next year if I downgraded, especially since you can move all your points over from other Chase cards to that account.
You can redeem points at 1.5 cents/point as a statement credit on groceries/dining (including delivery orders). I'm almost done burning my way through 150,000 points to be able to cancel my card.
edit: The keyword to search for is "Pay yourself back"
edit: The keyword to search for is "Pay yourself back"
Wish the author didnt just transcribe the interview, there was no real TL;DR or take away.
I read it but don't have a grand takeaway
I read it but don't have a grand takeaway
Here's what I remember:
Basically they bribed people with the biggest frequent flier miles offer up to that point in history, lost more money Fedexing cards to customers, got worked by the credit card churning crowd for all the bonuses possible, incentivized people to visit 4 airport lounges per trip and now are struggling to keep customers as travel has fallen off the face of the Earth.
So, exactly what you get when some exec says, "I just want to see a huge growth in customers, I don't care how you get it!"
Basically they bribed people with the biggest frequent flier miles offer up to that point in history, lost more money Fedexing cards to customers, got worked by the credit card churning crowd for all the bonuses possible, incentivized people to visit 4 airport lounges per trip and now are struggling to keep customers as travel has fallen off the face of the Earth.
So, exactly what you get when some exec says, "I just want to see a huge growth in customers, I don't care how you get it!"
IIRC Sapphire Reserve was considered a loss leader to attract higher income folks to Chase so they can cross sell more lucrative banking products. You can see how they tried to cash in on the Sapphire brand with Sapphire Checking, which is basically rebranded Premier Plus checking.
This is true. It was a bit of a joke tbh, since everyone I know who uses Chase Sapphire is nowhere touching JPM products with a long pole (extreme customer discrimination and all).
The churning crowd is all posers, I don't know why it bothers me that much, I think its because if they put that energy onto something actually entrepreneurial that gave them real cash or assets, they could afford to do all the things they brag about subsidizing with points, and still have the points, cards and various status'.
Like, they can still subsidize flights and hotels with points, but actually have some financial freedom.
Maybe its because people with many other hobbies don't pretend they have achieved socioeconomic status. Maybe its because the terms and conditions on points say they aren't assets, debt or anything really. Hard for me to place it, its the people in the churning communities trying to replicate travel bloggers that irk me. Maybe I’m just being classist, I enjoy being around people that can afford the business-class situations they are in, and theyre typically not bragging about it as its just fact of life and a fact of their peer’s life.
Like, they can still subsidize flights and hotels with points, but actually have some financial freedom.
Maybe its because people with many other hobbies don't pretend they have achieved socioeconomic status. Maybe its because the terms and conditions on points say they aren't assets, debt or anything really. Hard for me to place it, its the people in the churning communities trying to replicate travel bloggers that irk me. Maybe I’m just being classist, I enjoy being around people that can afford the business-class situations they are in, and theyre typically not bragging about it as its just fact of life and a fact of their peer’s life.
I read somewhere "Chasing points is coupon clipping for middle class", and that resonated deeply for me across all three stages of that behavior.
What are the 3 stages lol?
First thinking that coupons are worth the time, then thinking that points are worth the time, and finally learning the true value of time.
That's how they got customers in the first place. Isn't the article supposed to be about how they retained them?
I really don't see why people find it worth it to spend $550/year to get the Reserve. Sure, you get a lot of benefits, but I don't really see how they add up to $550 more in benefits over cards with $0 fee. If I want to buy $550 of airline points, I can do that without this card.
The $300 yearly travel credit brings it down to $250 which is more approachable. Then you include the $100 Global Entry credit as well as Lyft benefits (10x points on Lyft + Lyft Pink sub)and it starts to "pay for itself." They're also offering $120 in credits to Peloton Digital subscriptions right now. Seeing the $550 charge on the statement isn't always fun but I think the benefits can start to make sense if you take advantage of them.
From the hyped introduction until earlier this year, the fee was $450/yr, bringing it to $150/yr with travel credit.
You also used to be able to cycle the opening bonus of 100k or 80k points every 18 months with the Preferred and Reserve. If you had a partner and were diligent about timing, it was a ridiculous amount of points.
I have a stash of bonus points and that I book hotels and trips with for years.
Previously the hotel and flight bookings in their portal were very good deals, at some point they switched to booking through a rebranded Expedia and now I would say the prices are average compared to other travel aggregators. You still get a higher value redeeming them for travel vs cash back though.
You also used to be able to cycle the opening bonus of 100k or 80k points every 18 months with the Preferred and Reserve. If you had a partner and were diligent about timing, it was a ridiculous amount of points.
I have a stash of bonus points and that I book hotels and trips with for years.
Previously the hotel and flight bookings in their portal were very good deals, at some point they switched to booking through a rebranded Expedia and now I would say the prices are average compared to other travel aggregators. You still get a higher value redeeming them for travel vs cash back though.
one plus side of booking through chase is that it is pretty much no questions asked cancellation refunded to your original payment method, whereas if you book through an airline good luck trying not to get "travel credits"
the card is intended for upper-middle income and above people who dine out and/or travel a lot. if you take advantage of the annual travel credit of $300, the effective fee is more like $250/year. if you redeem the rewards for airfare, it take a little over $4000 of dining + travel spending to break even versus a no-fee 2% cashback card. that's certainly more than I spend in a year (and I rarely fly, so I wouldn't make the most of the points), but it's not hard to imagine this being a great card for someone else.
https://thepointsguy.com/guide/break-even-point-chase-sapphi...
https://thepointsguy.com/guide/break-even-point-chase-sapphi...
Well first, it's effectively $250 a year because of the $300 travel credit. Second, there's other benefits like dashpass and lyft pink. Third, Chase has the best travel transfer partners for me and where I want to go. I flew first to tokyo last year by transferring to Virgin Atlantic, and using that to buy a ticket on ANA. Round trip was 120k points. Super easy to justify $250 a year based on that.
This year is a no brainier. 100 dollar statement credit and 300 travel/grocery puts the fee at 150. The effective cash back on dining is currently 4.5 percent when using the statement credit feature. There was also a doordash credit.
IIRC uber eats and rideshare also count for the travel credit, so even doing no traveling this year it wasn't very hard to get that full reimbursment.
Aside from what other people have mentioned already, there's one more trick. The Chase Freedom Unlimited gives 1.5 points per dollar on all purchases, which can be transferred to the Reserve and spent at 1.5 cents per point. Effectively a 2.25% cash back card if you don't mind using Chase to book travel, which is among the very best.
With $300 in travel refund it’s more like $250.
It is worth $250 over other cards? It definitely was for me pre-2019. The points add up fast if you travel for work.
It’s no longer a “great” card. But there isn’t a good competitor.
It is worth $250 over other cards? It definitely was for me pre-2019. The points add up fast if you travel for work.
It’s no longer a “great” card. But there isn’t a good competitor.
I still keep the Amex Platinum
The main issue with the Platinum is that it doesn't accrue points as fast as it doesn't have spending categories and it doesn't have as many transfer partners. There are ways to get a bunch of points though, its just different.
The varying perks are worthwhile and rotate a lot. Love the statement credits, $200 Uber credits and other things.
I think its worth it
Amex also only does soft-pulls, which to me is more valuable than any hard pull
The main issue with the Platinum is that it doesn't accrue points as fast as it doesn't have spending categories and it doesn't have as many transfer partners. There are ways to get a bunch of points though, its just different.
The varying perks are worthwhile and rotate a lot. Love the statement credits, $200 Uber credits and other things.
I think its worth it
Amex also only does soft-pulls, which to me is more valuable than any hard pull
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Yep. Unfortunately, I don't think I'm going to hit my $300 from travel this year. I did travel early-on but I put all that on another card for various reasons. And I normally spend 10s of Ks on travel :-/
Through June 2021 they’re treating groceries and gas the same as travel towards the $300.
Also, the rewards points can be redeemed for statement credit with the same 50% travel bonus on this “pay you back” thing against grocery and restaurant purchases
Also, the rewards points can be redeemed for statement credit with the same 50% travel bonus on this “pay you back” thing against grocery and restaurant purchases
Ah. Didn't know that. Thanks.
Really? The travel category includes Airbnb, car rentals, rideshare, public transportation, parking, tolls, etc. in addition to the more obvious flights and hotels.
I have spent exactly $0 on any of those things since early March.
Yup. 3% on travel w/ +50% redemption is 4.5%. If you book travel on your personal card for any reason that adds up fast.
If you have a Chase Sapphire Reserve card, you can actually get $250 in free statement credits if you call them and ask for the retention offer to help cover the annual fee. https://thriftytraveler.com/chase-sapphire-reserve-retention...
Ironically, I called to cancel mine a couple days ago (without knowing about the retention offer) and the CSR asked why. I said that the reduced benefits and increased annual fee made it no longer worth it for me and I was then offered the $250 statement credit. I accepted since that drops the annual fee to a reasonable level. I don't know if I'll stay next year without an additional offer, though. At the previous annual fee of $450, before COVID when I traveled a fair bit for work, and with easily-transferable points for personal air travel, the benefits easily paid for the annual fee. Now work travel is all canceled, the annual fee is up to $550, and their points can't be redeemed for travel on several of the airlines that I flew most frequently. Ah well, first-world problems.
Called and cancelled mine a few months ago, they didn't offer a retention offer that big. Oh well i no longer wanted it
I canceled a Chase United Club card a while back as it made no sense to renew for benefits I wouldn't use for many months. They offered me $200.